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7.3 ACATS Transfers, Transfer-on-Death Accounts, and Account Changes

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Investment Company and Variable Contracts Products Principal Series 26

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1 Chapter 1: Registration of the Broker-Dealer and Its Associated Persons

1.1 Broker-Dealer Registration, FINRA Membership, and Firm Filings 1.2 Individual Registration: Forms U4 and U5, Registration Categories, and Exempt Persons 1.3 Pre-Hire Screening, Fingerprinting, and Statutory Disqualification 1.4 Heightened Supervision, Interim Plans, and the Taping Rule 1.5 Broker-Dealers, Investment Advisers, Dual Registrants, and Unregistered Entities

2 Chapter 2: Training, Continuing Education, and Product Knowledge

2.1 Continuing Education (Rule 1240), the Maintaining Qualifications Program, and the Annual Compliance Meeting 2.2 The Investment Company Act of 1940: Classifications, Registration, and Fund Governance 2.3 Mutual Fund Pricing, Redemption, Exchanges, Sales Charges, and Share Classes 2.4 Variable Annuities and Variable Life Insurance: Structure, Charges, and Rule 2320 2.5 Closed-End and Interval Funds, UITs, Money Market Funds, 529 Plans, and Investment Risks

3 Chapter 3: Supervisory System, Conduct Standards, Insider Trading, and Discipline

3.1 The Supervisory System, Written Supervisory Procedures, and Standards of Conduct 3.2 Insider Trading, Information Barriers, and Personal Trading Supervision 3.3 FINRA Investigations, Disciplinary Proceedings, Sanctions, and Exemptions

4 Chapter 4: Communications with the Public

4.1 Communications Categories, Principal Approval, Filing, and Recordkeeping (Rule 2210) 4.2 Content Standards, Investment Company Advertising, and Professional Designations 4.3 Variable Contract Communications, Fund Rankings, Bond Fund Volatility Ratings, and Investment Analysis Tools 4.4 Correspondence and Internal Communications, Social Media, Public Appearances, and Telemarketing

5 Chapter 5: Recommendations, Customer Accounts, and Product Sales Supervision

5.1 Regulation Best Interest, Conflicts, and Form CRS 5.2 Know Your Customer, FINRA Suitability, and Institutional Accounts 5.3 New Accounts, Customer Authority, Discretion, and Order Handling 5.4 Mutual Fund Breakpoints, Share Classes, and Switching Supervision 5.5 Deferred Variable Annuities and the Seven-Business-Day Principal Review 5.6 Prospectuses, Summary Prospectuses, SAIs, and Ongoing Disclosures

6 Chapter 6: Compensation, Outside Activities, and Personal Conduct

6.1 Cash Compensation, Distribution Arrangements, and Conflicts 6.2 Gifts, Gratuities, and Business Entertainment (Rule 3220) 6.3 Training Meetings, Sales Contests, and Non-Cash Compensation 6.4 Referral Payments, Bank Networking, and Unregistered Persons 6.5 Outside Business Activities, Private Securities Transactions, and Rule 3290 Transition 6.6 Outside Accounts, Borrowing and Lending, Account Sharing, and Guarantees

7 Chapter 7: Customer Account Operations, Transfers, and Privacy

7.1 Account Records, Trusted Contacts, Confirmations, and Statements 7.2 Cash Accounts, T+1 Settlement, Regulation T, Extensions, and Freeriding 7.3 ACATS Transfers, Transfer-on-Death Accounts, and Account Changes 7.4 Regulation S-P, Incident Response, Service Providers, and Identity Theft

8 Chapter 8: Anti-Money Laundering, Customer Identification, and Sanctions

8.1 AML Program, Independent Testing, Training, and Governance 8.2 Customer Identification, Due Diligence, and Beneficial Ownership 8.3 SARs, CTRs, OFAC, Information Sharing, and AML Red Flags

9 Chapter 9: Supervisory Controls, Business Continuity, and Regulatory Reporting

9.1 Supervisory Controls, Annual Testing, and CEO Certification 9.2 Business Continuity, Systems Resilience, Cybersecurity, and Vendors 9.3 Rule 4530, FOCUS and Annual Reports, and Customer-Asset Events

10 Chapter 10: Office Classifications, Inspections, and Records

10.1 OSJs, Branches, RSLs, and Inspection Cycles 10.2 Inspection Reports, Independent Review, Signage, and Office Files 10.3 Broker-Dealer Books and Records, Electronic Storage, and Correspondence

11 Chapter 11: Complaints, Arbitration, Mediation, and Expungement

11.1 Customer Complaints, Investigation, Retention, and Reporting 11.2 Predispute Agreements, Arbitration Codes, Eligibility, Panels, and Awards 11.3 Mediation and Customer-Dispute Expungement

12 Chapter 12: Financial Responsibility, Membership Changes, and Investor Protection

12.1 Net Capital, Minimum Tiers, Haircuts, and Early Warning 12.2 Customer Protection, Possession or Control, Reserve Formula, and Exemptions 12.3 New-Product Review and Continuing Membership Applications 12.4 SIPC, Fidelity Bonds, Proxy Materials, and Financial Reports

7.3 ACATS Transfers, Transfer-on-Death Accounts, and Account Changes

Key Takeaways Explain This Topic AI

Under Rule 11870, the receiving member initiates an ACATS transfer and the carrying member generally has one business day to validate or take exception.

After validation, the carrying member generally completes the transfer within three business days, while nontransferable assets require customer instructions and disclosure.

Rule 2140 prohibits interfering with a customer's request to transfer an account when the customer's representative changes firms, including seeking a court order that blocks the transfer request.

Ownership, beneficiary, address, marital, and authority changes require authentication, appropriate legal documents, principal controls, and records reflecting the effective date.

Last updated: September 2026

Automated Customer Account Transfer Service (ACATS) — FINRA Rule 11870

When a customer decides to move their account from one broker-dealer to another, the transfer is governed by FINRA Rule 11870 (Customer Account Transfer Contracts) and processed primarily through the Automated Customer Account Transfer Service (ACATS) operated by the National Securities Clearing Corporation (NSCC).

Initiation: Form TIF

The account transfer process is initiated by the customer:

The customer completes and signs a Transfer Initiation Form (TIF) (or submits an electronic transfer authorization) and delivers it to the receiving broker-dealer (the new firm).

The receiving firm immediately submits the transfer request into the ACATS system, transmitting the instruction to the carrying broker-dealer (the firm currently holding the assets).

Mandatory ACATS Timelines

Rule 11870 enforces strict, enforceable deadlines:

Validation Phase (1 Business Day) : The carrying firm has exactly 1 business day following receipt of the transfer instruction to either validate the transfer or reject it for specific permissible reasons.

Completion / Delivery Phase (3 Business Days) : Once the transfer is validated, the carrying firm must complete the actual transfer and delivery of all securities and cash positions within 3 business days following validation.

Permissible vs. Impermissible Grounds for Rejection

A carrying broker-dealer may reject a transfer request only for valid operational defects, including:

Inconsistent or mismatched account title (e.g., individual account transferred to a joint account without proper transfer paperwork);

  • Invalid or missing customer signature;
  • Account number does not exist or is incorrect;

Missing legal documentation for fiduciary or corporate accounts (e.g., trust agreement, corporate resolution, letters testamentary).

Impermissible Rejection Grounds : The carrying firm cannot reject or delay a transfer because of:

a discrepancy in securities positions or money balances , which the firms must resolve rather than use as a reason for an exception;

  • an employment dispute with the departing representative who serviced the account (Rule 2140);
  • a wish to make a retention offer or persuade the customer to stay; or

the presence of nontransferable assets , which are handled through the separate disposition process below.

Handling Non-Transferable Assets

A nontransferable asset is one the receiving firm cannot accept, such as the carrying firm's proprietary product (unless the receiving firm agrees to take it), a third-party fund with which the receiving firm has no arrangement to carry it, or an asset outside the receiving firm's permitted business. For a whole-account transfer that includes the carrying firm's proprietary products, the carrying firm must list them for the customer and ask in writing, at or before validation, how to dispose of them. The alternatives are:

Liquidate the position, with disclosure of any redemption or liquidation fees, and distribute the remaining cash;

Retain the asset at the carrying firm for the customer's benefit; or

Transfer it physically and directly in the customer's name to the customer.

For a third-party fund the receiving firm cannot hold, a further alternative is transfer to the fund's sponsor for credit to an account the customer opens there.

FINRA Rule 2140: Anti-Interference Mandate

Under FINRA Rule 2140 , no member or associated person may interfere with a customer's request to transfer an account in connection with a change in employment of the customer's registered representative , as long as the account is not subject to a lien for money the customer owes or another bona fide claim. Prohibited interference includes seeking a court order that would bar or restrict a customer's written transfer request from being submitted, delivered or accepted. A firm's dispute with a departing representative over a noncompete or a customer list is between the firm and the representative; it cannot be used to hold the customer's assets. Rule 2140 does not change the Rule 11870 transfer procedures.

Transfer-on-Death and Beneficiary Registrations

A transfer-on-death (TOD) registration names one or more beneficiaries to receive eligible account property at the owner's death without giving those beneficiaries present trading or withdrawal authority. The owner retains control during life and may generally change the designation according to the agreement and applicable law. At death, the firm authenticates the death, reviews the registration and required documents, resolves restrictions, and transfers assets under the governing TOD rules. A will does not automatically rewrite a valid account registration.

Joint ownership, retirement-account beneficiary designations, trusts and TOD registrations have different legal effects. Representatives should not give legal advice or decide family disputes. Ambiguous or conflicting claims go to the firm's legal and operations process, with assets restricted when appropriate.

Divorce, Death, and Authority Changes

A divorce decree, qualified domestic relations order, property-settlement agreement or court order does not authorize a representative to improvise a transfer. The firm must determine that the document applies to the account and assets, is final or otherwise operative, and provides sufficient direction. Retirement assets may require plan or custodian procedures and tax-sensitive handling.

Address, name, ownership, power-of-attorney, trustee, guardian and authorized-person changes require identity verification and supporting documents appropriate to the request. High-risk changes should receive out-of-band confirmation using established contact information. The principal should monitor a change followed quickly by liquidation, a new bank instruction or a full transfer.

Control Checklist

  • Event Evidence and control
  • ACATS transfer Transfer instruction, validation, asset review, exception reason and status
  • TOD change Signed designation, identity authentication and effective-date record
  • Death claim Death evidence, account agreement, beneficiary identity and restrictions
  • Divorce transfer Operative court or settlement document and legal/operations approval
  • Address or bank change Authentication, notice and heightened review of immediate disbursement

Delays must be based on a legitimate operational or legal issue, not an attempt to retain assets. Escalate forged documents, dueling powers of attorney, suspected exploitation and unexplained instructions from a new third party.